U.S.-listed Asian shares hit in tech wreck

CBS.MarketWatch.com

TOKYO (CBS.MW) -- While many American Net stocks clawed back from huge losses Tuesday -- erasing a sector-wide drop of 18 percent during the day as brave bargain hunters picked through the rubble -- their U.S.-listed Asian cousins weren't so lucky to escape the tech wreck.

Asia-Pacific Net companies may follow similar business models, but they operate in countries where business conditions are often unfamiliar to U.S. investors. That, along with their relative scarcity on U.S. stock exchanges, makes them more exotic plays. Yet investors haven't deemed that a reason to regard Asian Net plays as possibly riskier than other stocks in the sector.

If anything, they clamored for more ways to get a piece of the action as the U.S. ".com" boom spread to the Far East. The drooling over the March 8 Nasdaq IPO of Japanese e-mail specialist Crayfish
crfh
highlighted this -- it was the 10th largest first-day gainer in new-issue history -- until Crayfish belly-flopped in its Tokyo debut two days later.

For Asian Nets at least, valuing risk has suddenly forced its way into the equation with a vengeance.

Perhaps no other company embodies the Asia Net scene better than Chinadotcom Corp.
"
at least as far as investors are concerned: A stunning first-mover IPO last July, the magic of China and its billion-plus potential surfer-customers and business-to-business builders, dotcom built into its name.

A lot of investors didn't seem to know or care what the Hong Kong-based company did. Chinadotcom's media handlers for months have tried to drive home the message that the company is more than just an operator of vast portal sites. While it does distribute content through its four-pronged Greater China portal network, it also invests in and builds e-businesses and sells services through online advertising.

When Chinadotcom shares were trading near $146 each last month on the Nasdaq, the company's board approved a second 2-for-1 share split in less than a year. Since then, however, the market has already knocked well more than half off the company's share price. The stock closed down 10.12 percent at 57 3/4 after rebounding from a low of 47 1/2.

Chinadot...crumble

Chinadotcom's recent spinoff, portal player Hongkong.com Corp., is getting hammered Wednesday on the Growth Enterprise Market for start-ups. Indeed, GEM action saw Hongkong.com, Tom.com, and Sunevision shares all take10-percent haircuts in mid-morning trade. In the dumps Down Under

Meanwhile, shares of New Tel Ltd., an Australian company trying to catch the wireless wave in China
nwll
were the second-biggest percentage loser in Sydney, down 18.7 percent to 2.77 Australian dollars. In Nasdaq trading overnight, New Tel's American Depositary Receipts (ADRs) closed down 3, or 13.7 percent, to 18 7/8.

Looksmart Ltd., a San Francisco-based search engine whose birthplace is Down Under confirmed it was in talks with Australian telecommunications giant Telstra Corp.
TLS, +1.28%

LookSmart shares have looked smarter

Local media have reported Telstra is pursuing an equity stake in LookSmart
"
but it hasn't done the latter's share price much good yet. The stock, fifth on the volume charts, was down 10 percent to 2.88 Australian dollars. LookSmart's ADRs fell 6.3 percent to 34 7/16, down 2 5/16.

Nasdaq-listed shares of Internet service providers from Seoul to Singapore also fared poorly. Korea Thrunet Co.
korea
got thrashed, shedding 23.5 percent to end at an all-time low of 25 7/16.

Pacific Internet Ltd. of Singapore
pcntf
shares lost 14.4 percent to 29 5/16, after having slipped as low as 23 5/8.

Another recent IPO, AsiaInfo Holdings Inc.
ASIA, -0.37%
got no help from the "market perform" rating by Deutsche Banc Alex. Brown, which started coverage on the stock Tuesday and set a 12-month price target of $55. Shares closed 9.7 percent lower at 50. In after-hours trading, AsiaInfo lost an extra 4 to 46.

Internet Initiative Japan on a roller coaster

Internet Initiative Japan Inc.
IIJI, -3.06%
like Beijing-based AsiaInfo a supplier of Net infrastructure systems and services, withstood a comparable drubbing of 9.2 percent, to end down 5 5/8 at 55 1/2.

IIJ trades only on the Nasdaq but its shares have been buffeted not only by the storm in the U.S. market, but also by a hostile shift in sentiment towards homegrown Net leaders such as Softbank and Hikari Tsushin, whose shares in Tokyo have collapsed this year by more than 50 percent.

Fighting the tide

Swimming against the tide, at least for the New York trading day, was Crayfish. It gained 2.9 percent, or a point, to 35 1/2, up a point. But a flood of sell orders in Tokyo has prevented the stock from trading Wednesday because no buyers have yet surfaced.

Satyam Infoway, a leading Internet service provider in India
SIFY, -2.58%
was one of the rare stocks from Asia to really experience the boomerang effect that rescued many American Net plays. Infoway ended down just 2.47 percent at 41 7/8, after having plummeted 22 percent at one stage to 33 1/2.

But the Asia-Pacific group could boast no EBay
EBAY, +0.77%
or Checkpoint Software Technologies
CHKP, +0.34%
the Israeli Internet security company. These were the stand-outs which dressed up the two major U.S. Net indices to disguise the sector's internal bleeding.

The 17-stock Goldman Sachs Internet Index declined 1.2 percent to 567.20. But it could have been worse. The Net barometer was down 18 percent at its session lows as the Nasdaq Composite took a 574-point plunge.

Staging a hearty comeback from a deficit of 16 percent earlier in the day, the Amex Internet Index ended up 0.3 percent.

"Our top picks reflect the theme of growth at a reasonable price and a move away from the new economy stocks," Darby said. "We believe Cathay Pacific Airway's fundamentals
CPCAY, -0.05%
will start to be reflected in both relative and absolute performance, while Amoy, New World Infrastructure
NWIFF, +0.00%
and Hong Kong and China Gas
HOKCY, +0.52%
reflect our confidence in old-economy shares."

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